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United Kingdom: Latest developments in working life Q1 2019

Developments in Brexit negotiations, recent research on the UK’s skills base, union criticism of the government’s Good Work Plan anda legal challenge to the gig economy are the main topics of interest in this article. This country update reports on the latest developments in working life in the United Kingdom in the first quarter of 2019.

Extension to Brexit negotiations agreed

In March, the Confederation of British Industry (CBI) and the Trades Union Congress (TUC) joined forces to demand that Prime Minister Theresa May change her approach to Brexit, warning that the country faces a national emergency. The social partners wrote a joint letter, calling for both an extension and a new plan. They proposed that Members of Parliament be allowed to hold indicative votes on the best ways to reach a consensus, or another mechanism for compromise. They also said that the plan must command a parliamentary majority, be negotiable with the EU and protect workers, the economy and an open Irish border. [1]

In early April 2019, the EU and the UK agreed on an extension to Brexit, which is set to last until 31 October 2019. [2] Referring to the extension, the CBI said that an imminent economic crisis has been averted, but that the continuation of things as they are will result in more chaos in the autumn. The confederation calls for ‘sincere cross-party collaboration’ in order to end the crisis. [3]

UK skills base falling behind

A new report from the Learning and Work Institute (LWI) argues that cuts in public funding for adult skills, in conjunction with diminishing employer investment, have resulted in the UK’s skills base progressively lagging behind that of comparable countries. [4] The report states that a key aspect of the decline in skills training has been a fall in UK employer investment. Per worker, investment now sits at half of the EU average and GBP 5.1 billion (€5.9 billion as at May 2019) less, in real terms, than 10 years ago. Coupled with substantial cuts in government funding for adult learning (45% since 2009–2010) and substantially lower participation rates (the lowest in 20 years), the LWI describes the decline in skills training as representative of a ‘perfect storm’ for the UK.

Similarly, the National Audit Office recently published a highly critical report on the UK apprenticeship system, which argued that it may not be financially sustainable. [5] The average cost of training an apprentice has now doubled compared to 2015 government predictions, in part due to difficulties with the apprenticeship levy.

Unions criticise Good Work Plan

The Good Work Plan (published in December 2018) outlined government proposals to implement recommendations made in Good Work: The Taylor Review of Modern Working Practices (July 2017). These proposals included the pledge that millions, particularly in the gig economy, would benefit from enhanced rights.

In reality, the changes are likely to be limited, with the most notable being the abolition of the ‘Swedish Derogation’ for agency workers. For those on insecure contracts, however, the proposals do include the right to request a fixed working pattern after six months.

The plan falls short of union expectations and the reaction has been critical. Unite the Union said it had ‘spectacularly failed to deliver’ on its promise to tackle insecure work, whilst the GMB general union described it as a ‘disappointing missed opportunity’. The TUC pointed out that one in nine workers (3.7 million people) are in insecure jobs and that the government is merely urging them to rely on the goodwill of their employers. [6]

Hermes leads gig economy developments

In February, the GMB signed a ‘ground-breaking’ agreement with courier firm Hermes.[7] This was negotiated after an employment tribunal last June ruled that 200 of the company’s couriers, which Hermes had previously treated as self-employed, were actually entitled to the national minimum wage and holiday pay. [8]

As a result, the firm’s 14,500 couriers now have the option of either being fully self-employed, where they earn ‘premium’ rates per delivery, or to switch to a ‘self-employed plus’ arrangement. This allows them to retain flexibility, but ensures guaranteed earnings. Whilst their pay is still calculated according to the number of deliveries made, the company makes extra payments when available work fails to earn them the equivalent of £8.55 an hour. They are also entitled to holiday pay.

Commentary

There is still a great deal of uncertainty surrounding Brexit, despite the 31 October extension. Government ministers are currently in talks with leaders of the opposing Labour Party in an effort to find a compromise. However, Labour’s leader has said that talks are stalling due to the Conservative Party’s desire for post-withdrawal deregulation.[9] Labour has been calling for a customs union, as well as protection for worker, environmental and consumer rights. The government, however, will reportedly not shift its position, which suggests that the impasse will continue.

In terms of the country’s skills base, whilst the UK has made progress towards its skills targets, the growing proportion of qualified people in other countries means that it is set to fall from fourth to sixth within the G7 in terms of low skills.

Finally, it seems unlikely that the Good Work Plan will lead to significant changes to insecure work, particularly within the gig economy. However, as illustrated by the Hermes case, unions continue to secure victories through legal challenges and workplace arrangements.